Case Study

Detail: Supplier Selection

Project Detail

A steel rolling mill was considering changing suppliers for rolling mill lubricant. Mill lubricants are critical to a variety of product characteristics, but to assess multiple vendors required fully replacing the lubricant on the mill and running trial production through the mill and the remaining processing steps so the sample size was limited.

Solution:Process Performance Analysis

Savings:$70 million annually

Overview

There were two different types of annealing furnaces in use, and the lubricant might very well have responded differently to the two types. For each furnace type, there were two furnace practices tested. Additionally, one of the vendors changed their formulation in the middle of the study to try to improve their ratings.

The critical product requirement was sheet cleanliness at the end of the process as defined by total carbon and top and bottom surface iron residuals. The new lubricants were expected to produce cleaner steel surfaces than the old animal-fat based lubricant. This was needed since the new anneal furnaces were found to produce dirtier steel than the old ones.

Procurement had agreed to the test and presumed that they would only need to prove that all of the vendors were capable of making the cleanliness requirements and that they would then choose the least expensive alternative. The research questions for this portion of the study were:

What effects do the four vendor's rolling lubricants have on the cleanliness of both types of annealed steel?

What are the capabilities of the different formulations in meeting internal cleanliness specifications?

Our Approach

To analyze the data, two approaches were used. An ANOVA was used to determine if there was a statistically significant shift in the average total carbon and top and bottom iron across the new formulations and as compared to the old formulation. To determine the capabilities of the different process streams, Process Performance Analysis was done using ROI Senior Consultant Michael V. Petrovich’s program PERFORM. The analysis took about a week once the four months of data were collected.

Project Scope

This project had to happen at an accelerated time frame. The vendor trials were already set up and were very expensive.

The client had previously endured a very expensive defect associated with this process

There was no opportunity to experiment - the trials were scheduled and extrenely costly and difficult to delay

A decision had to be made quickly upon completion of the trial

Once selected, it would be difficult or impossible to switch vendors again

End Results

The average cleanliness was not greatly affected by using the new oils for old anneal furnace coils (though Vendor 2 was slightly cleaner on average). However, most of the new lubricants did significantly improve the cleanliness of the steel that was annealed in new anneal furnaces. The exceptions were both formulations from Vendor 4 which interacted with the new anneal furnace atmosphere and resulted in a higher average total surface carbon as compared to the other new lubricants.

Vendor 2 showed the best ability to make clean steel for both the old and new anneal furnaces. Vendor 1 was right behind with the same capability in the old furnaces, but barely capable in the new anneal furnaces. Vendor 3 was not capable due to higher variability and two old anneal furnace coils that were out of spec. The first Vendor 4 formulation was not capable of meeting the specification limit in old or new anneal furnaces. The second formulation was better for the old anneal furnace but was even worse than baseline for the new anneal furnace coils.

Below is part of the output from the ANOVA to determine if there was a significant shift in the total carbon (higher means are dirtier). The analysis showed that the total carbon for the old anneal type is statistically the same regardless of lubricant, and that the new furnace type was always dirtier, but that vendors 1, 2, and 3 were all statistically different than the baseline animal fat with the new anneal furnaces and that both of vendor 4’s formulations were even dirtier than the baseline. This general pattern was found with the surface iron as well.